The wave of automotive price increases in Israel began after the Knesset approved changes to vehicle taxation on the last minute. Due to the rise in the tax on the acquisition of electric vehicles from 35% to 45% and the reduction of the tax credit cap, automotive importers are publishing updated tariffs for 2025 that reflect the resulting price increase.
The pace of increases shouldn’t be expected to be uniform as each category has seen different tax changes. In addition, major importers prepared in advance for January 1 and transferred stocks and orders. As of today, they’ve a particularly large stock of 80,000 unsold cars that were exempt from customs clearance before the top of 2024 under the old taxation.
This situation is predicted to guide to a gradual increase in prices and a wave of sales, which, at the very least in the short term, will somewhat limit the blow to buyers. According to industry estimates, the updated tariffs of most importers will increase prices by as much as 5%. A bigger jump in tariffs is predicted across the second and third quarters, as each importer’s “cheap” inventory expires and is liable to changes in exchange rates.
As for petrol, hybrid and plug-in cars, the important change is the reduction in environmental tax advantages, with the utmost ceiling lowered from NIS 18,000 to NIS 14,000 shekels. In addition, a “pollution penalty” might be imposed on probably the most polluting cars, which could amount to as much as NIS 7,500. These changes may also result in a rise in the prices of popular family crossovers. Ultimately, the results might be felt in all areas, each on the private and leasing markets.
As at all times, the “leader” in publishing price revisions is Tesla, which operates a model that is exclusive on the Israeli automotive market. The latest price list takes into consideration the rise in tax on the acquisition of electric vehicles, the reduction of the utmost tax relief and the rise in VAT from 17% to 18%.
Tesla’s sales leader in Israel, the Model Y series, grew by a mean of about 11%. The price of the essential Y RWD version increased to NIS 247,000 from NIS 218,000 in December. The long-range version now costs NIS 291,000, up from NIS 256,000 in December. The price of the Tesla Model 3 series has increased by a mean of seven%, depending on the model. The basic RWD version now costs NIS 213,000, up from NIS 197,000 in the December price list. The long-range version now costs NIS 247,000 down from NIS 228,000.
Price lists also reflect a big increase in the annual license fee for electric vehicles, which is able to start in January, from a flat rate of NIS 500 to hundreds of shekels, depending on the value of the vehicle, much like gasoline vehicles. However, Tesla normally reflects tax changes in tariffs almost routinely, but there have been cases in the past where Tesla has lowered list prices for marketing reasons after publishing initial tariffs, sometimes inside a matter of weeks.
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Unlike Tesla, which routinely updates prices, there have been no significant changes in the prices of the opposite hottest electric vehicles available on the market to this point. BYD, the market leader, has to this point only increased VAT by 1%, other brands have also increased prices by only a number of percent. This is as a consequence of the massive stocks imported into Israel over the past three months.
Prices for the BYD ATTO 3, the country’s best-selling electric model, currently start at around NIS 170,000 for the bottom model and go as much as around NIS 180,000. A major element of the value increase is the vehicle registration fee, which, as a consequence of tax changes, has increased from roughly NIS 500 shekels to roughly NIS 2,350.
Published by Globes, Israel business news – pl.globes.co.il – January 2, 2025
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